Hi there, I’m Arun Rajiah, the CEO and Managing Director of Billionaire Venture Capital. And today I’ll be discussing with you perhaps the most crucial aspect of launching a startup or business that is finding the ideal co-founder.
Big success is always co-founded
Let’s begin by addressing the first question off the top of your head: ‘do I really need a co-founder?’ Well, let me put it this way: most of the super-successful startups like Microsoft, Google, Facebook, Apple, and so on had a co-founder to start with. But the only thing is we haven’t heard about them the most as compared to their popular fonder counterparts, but their contribution, especially during the early stages of the aforementioned juggernauts, played a vital role in their rise to prominence. So now to answer your question, yes, you need a co-founder, the right one, if you want to match the success of the aforesaid giants.
Family and friends usually are poor candidates
So hopefully I’ve persuaded you to have a co-founder when you launch a business. What if, though, you’re eager to launch a business right away but don’t have a co-founder who is instantly accessible or someone you can bring on board? Should you launch your startup by choosing someone who’s family or a friend? Well, my default answer is a hard no. You might even think that having someone so close would help. But that’s where things will go wrong for everyone involved. Everything will be fine until it’s not. Things will get highly complicated, even worse, personal. As a rule, try to keep your family, friends, and well-wishers away while looking for a co-founder. Trust me; it’s for your best.
Investors aren’t suitable candidates either
Similarly, another red flag would be selecting a current investor as a co-founder. Let me explain why it’s not advisable because it’s so primal. As a founder, your ultimate goal for your startup is not and should not be entirely about monetary gains. But on the other side, an investor is on the ride for the big ROIs. So it’s essential that the founder and the co-founder should also be more concerned with the vision over the balance sheet. But you can’t ask the same from an investor, because you shouldn’t. So beware of the consequences if you’re thinking about making an investor your co-founder because it usually will lead you into chaos. It’s a trap!
Factor 1: Complementary talents
Enough with the dark side of the moon. Let’s embrace the light by discussing what makes for a good co-founder now. Well, I believe there are two primary qualities to look for in a co-founder when beginning a business. The first is productivity; by sharing the task with someone else, you may accomplish a lot more. Additionally, you may do considerably more if you have a co-founder with complementary abilities who can perform tasks that you are unable to. There is also someone you love talking with about ideas. So that you have someone to talk you out of possibly awful ideas or to brainstorm with and come up with better ideas than you could alone. Thus, working with a co-founder greatly improves both the quantity and quality of your output. It makes your life and business easier and breezier.
Factor 2: Emotional and rational support
Emotional and rational support is the second factor. The path of a startup is highly demanding and tough. And having a support system is wonderful, especially in trying times. The best co-founder partnerships, from what I’ve observed, have this dynamic where the two co-founders sort of counterbalance one another. As a result, if you’re having a terrible day, feeling down and discouraged, turning pessimistic like quoting Schopenhauer, and terrified the sky is going to fall, the other co-founder may just lift you up a little and keep you going and inspired. An ideal co-founder will take ownership and will push you to grow beyond your limits.
Someone you can trust, truly
You can enhance productivity by talent acquisition or by bringing in your own consultants, but you won’t receive the same level of emotional support that you would from a co-founder. Because employees are not everyone, but most of them care more about their paychecks and you can’t blame them. So you can’t really be as honest or upfront about the business with them as you can with a peer. And that is what a co-founder provides.
Your better-half might get angry
Does all this feel like an exaggeration to you? If it does, let me break this to you. When you find the right co-founder, from that moment, you’ll be spending more time with them than your spouse or girlfriend. That’s how it’ll be, and I don’t make the rules.
Furthermore, where should you start your search for co-founders? Well, the answer here is a little obvious. It’s to start with the people you already know with similar goals and ambitions. So ideally, networking platforms like LinkedIn, Angellist, etc., are among the best places to find a co-founder. You also can attend startup events and I would suggest that you just look for people with a shared vision if you meet any interesting and enthusiastic personalities with complementary skills, and then just ask “Hey, if you’re interested, how about we start a company together?” Then keep your fingers crossed.
Once you’ve identified a prospective co-founder, let’s assume you’ve kind of done that, and you’ve decided, “Hey, we do want to start the firm, and we want to be co-founders,” there are two key items you should make sure you both agree upon. The equity split, or how much of the corporation each shareholder owns, comes first. Now, I believe the best way to approach this is to consider that a coequal equity allocation should be your sort of default setting.
You should start there because, assuming nothing has been developed yet, and the firm is still in its infancy, you both will contribute equally and want to be equally driven to work really hard for the company. And you still have years and years of work ahead of you. Therefore, there isn’t really a good reason to depart from a coequal equity split at the beginning. But I have successfully used alternative equity structures in the past. And that is why I believe the primary issue you’re trying to solve here is ensuring that both of you are content with the equity structure so that you’ll both be driven to work on the business for a very long time. Agree?
Can you see the red flag?
The CEO is the second thing I believe you should properly determine. Having this talk can occasionally be awkward. And to be really honest, I believe it to be a kind of red flag if the talk is awkward. The majority of the time, it could be advantageous if the CEO is a person, with the CEO title being the person persuading clients and users. Clients and users may feel slightly more impressed if the CEO is making the pitch to them. And this kind of drives home the fact that the CEO title is really the only one that matters. And it pertains to the outside world, notably, I would argue, to investors. Investors are therefore interested in the presence of a type of clear leader and a clear tie-breaking decision-maker. And the CEO ought to be that person. Therefore, it is normally preferable for the CEO to be the one that leads the talks and sort of does most of the talking when you are pitching investors.
You wouldn’t be excellent co-founders for each other if you both believe that being the CEO is really essential to you. All of these are really bad indicators, correct? Therefore, be sincere with one another and merely stay away from all that suffering and anguish by delaying the coming together. If you do, you should establish a business with someone who doesn’t care about that stuff. If you and your partner don’t care, you may choose anyone you think is best for the position right now, even if that decision changes in the future.
Legal, corporate, and paperwork
So after you’ve decided who would serve as the CEO, you can now march ahead. And formalizing basically only requires creating a vesting agreement and forming a business. This is quite significant. We don’t all receive our shares in the firm at once, which is referred to as vesting. They vest over time, and you should certainly make sure that you have the appropriate templates and paperwork in place for this. It’s kind of the trigger for when you start making things real by taking care of the legal, corporate, and paperwork once you’ve committed to yourself and each other that you’re going to try to develop a company together. You are then essentially ready to go. That concludes my advice on how to go about selecting the ideal co-founder and putting it into action. You’ll find what you’re looking for if you know where to look and I wish you good luck.